(a) A warehouse, by giving notice to the person on whose account the goods are held and any other person known to claim an interest in the goods, may require payment of any charges and removal of the goods from the warehouse at the termination of the period of storage fixed by the document of title or, if a period is not fixed, within a stated period not less than thirty days after the warehouse gives notice. If the goods are not removed before the date specified in the notice, the warehouse may sell them pursuant to Section 55-7-210 NMSA 1978.

(b) If a warehouse in good faith believes that goods are about to deteriorate or decline in value to less than the amount of its lien within the time provided in Subsection (a) of this section and Section 55-7-210 NMSA 1978, the warehouse may specify in the notice given under Subsection (a) of this section any reasonable shorter time for removal of the goods and, if the goods are not removed, may sell them at public sale held not less than one week after a single advertisement or posting.

(c) If, as a result of a quality or condition of the goods of which the warehouse did not have notice at the time of deposit, the goods are a hazard to other property, the warehouse facilities or other persons, the warehouse may sell the goods at public or private sale without advertisement or posting on reasonable notification to all persons known to claim an interest in the goods. If the warehouse, after a reasonable effort, is unable to sell the goods, it may dispose of them in any lawful manner and does not incur liability by reason of that disposition.

(d) A warehouse shall deliver the goods to any person entitled to them under Chapter 55, Article 7 NMSA 1978 upon due demand made at any time before sale or other disposition under this section.

(e) A warehouse may satisfy its lien from the proceeds of any sale or disposition under this section but shall hold the balance for delivery on the demand of any person to which the warehouse would have been bound to deliver the goods.

History: 1953 Comp., § 50A-7-206, enacted by Laws 1961, ch. 96, § 7-206; 2005, ch. 144, § 62.

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

Prior Uniform Statutory Provision. — Former Section 7-206 [55-7-206 NMSA 1978].

Changes. — Changes for style.

1. This section provides for three situations in which the warehouse may terminate storage for reasons other then enforcement of its lien as permitted by Section 7-210 [55-7-210 NMSA 1978]. Most warehousing is for an indefinite term, the bailor being entitled to delivery on reasonable demand. It is necessary to define the warehouse's power to terminate the bailment, since it would be commercially intolerable to allow warehouses to order removal of the goods on short notice. The thirty day period provided where the document does not carry its own period of termination corresponds to commercial practice of computing rates on a monthly basis. The right to terminate under subsection (a) includes a right to require payment of "any charges", but does not depend on the existence of unpaid charges.

2. In permitting expeditious disposition of perishable and hazardous goods the pre-Code Uniform Warehouse Receipts Act, Section 34, made no distinction between cases where the warehouse knowingly undertook to store such goods and cases where the goods were discovered to be of that character subsequent to storage. The former situation presents no such emergency as justifies the summary power of removal and sale. Subsections (b) and (c) distinguish between the two situations. The reason of this section should apply if the goods become hazardous during the course of storage. The process for selling the goods described in Section 7-210 [55-7-210 NMSA 1978] governs the sale of goods under this section except as provided in subsections (b) and (c) for the situations described in those subsections respectively.

3. Protection of its lien is the only interest which the warehouse has to justify summary sale of perishable goods which are not hazardous. This same interest must be recognized when the stored goods, although not perishable, decline in market value to a point which threatens the warehouse's security.

4. The right to order removal of stored goods is subject to provisions of the public warehousing laws of some states forbidding warehouses from discriminating among customers. Nor does the section relieve the warehouse of any obligation under the state laws to secure the approval of a public official before disposing of deteriorating goods. Such regulatory statutes and the regulations under them remain in force and operative. Section 7-103 [55-7-103 NMSA 1978].

Cross References. — Sections 7-103 [55-7-103 NMSA 1978] and 7-403 [55-7-403 NMSA 1978].

"Delivery". Section 1-201 [55-1-201 NMSA 1978].

"Document of title". Section 1-102 [55-1-102 NMSA 1978].

"Good faith". Section 1-201.

"Goods". Section 7-102 [55-7-102 NMSA 1978].

"Notice". Section 1-202 [55-1-202 NMSA 1978].

"Notification". Section 1-202.

"Person". Section 1-201.

"Reasonable time". Section 1-205 [55-1-205 NMSA 1978].

"Value". Section 1-204 [55-1-204 NMSA 1978].

"Warehouse". Section 7-102.

Repeals and reenactments. — Laws 2005, ch. 144, § 62, effective January 1, 2006, repealed former 55-7-206 NMSA 1978 as enacted by Laws 1961, ch. 96, § 7-206, and enacted a new section. Pursuant to 12-2A-14 NMSA 1978, the 2005 revision is considered an amendment rather than a new enactment.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 78 Am. Jur. 2d Warehouses §§ 213, 226, 227.

Liability of warehouseman and of surety on bond in respect of collection and remittance of proceeds of sale of merchandise, 121 A.L.R. 1155.

Liability of warehouseman for deterioration of goods due to improper temperature, 92 A.L.R.2d 1298.

93 C.J.S. Warehousemen and Safe Depositaries §§ 12, 47.